Revenue jumps expected to help close deficit

No immediate cuts in Newport Beach's city budget expected after increase in sales, hotel tax revenue.

February 07, 2011|By Mike Reicher, mike.reicher@latimes.com

Because of unexpected jumps in revenue from two important tax sources, Newport Beach officials expect to close their $2-million budget deficit for this fiscal year.

That's one of the highlights of the city's mid-year financial report, which the City Council will review during its regular meeting Tuesday night.

Newport started the 2010-11 fiscal year $2 million in the hole, but it appears that no immediate cuts will be needed to fill it.

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The city manager's report predicts that revenue from transient occupancy tax — the amount charged visiting hotel guests — and sales tax will both exceed expectations.

The transient occupancy tax should finish the fiscal year ending June 30 at $12.5 million, which is 8% more than the budget originally forecast. The Resort at

Pelican Hill had the greatest improvement since this time last year, compared with other hotels, the report says.

Sales tax is expected to exceed expectations by the end of the fiscal year. Officials forecast sales-tax revenues to ring in at $18.3 million, which would be 5% greater than originally forecast.

Restaurants and department stores had the best gains compared with this point last year, while luxury auto dealers remain the largest source of sales-tax revenue.

The overall largest revenue source for the city — property tax — is only expected to marginally outperform the budget, as housing values remain weak.

The City Council will also address:

Banning Ranch: Developers are finalizing the Banning Ranch master plan, and city officials expect to have reviewed all of its components by March.

The 400-acre proposed mixed-use development with 1,375 housing units will also require an extensive development agreement with the city. That agreement would detail roads, sewers and other infrastructure developers would build.

Officials expect a draft of the development agreement in March. After that, the environmental impact report is scheduled for public release in April.

The City Council will be asked Tuesday to approve a $100,000 extension for its Banning Ranch traffic engineering contract.

Public meeting policy: Officials will consider reducing the amount of time some speakers have to address the council at meetings from five to three minutes, among other changes to the city's open-meeting laws.